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The Ticker

FEMA and Romney's Fiscal Shell Game

Mitt Romney is being criticized today for comments he made last June, saying he hopes to shift FEMA's responsibilities to state governments or the private sector. Matt Yglesias has a good write-up explaining how Romney framed his comments as part of a broader effort to control federal spending.

There are a number of plausible reasons to have the government shift certain responsibilities to the states, but the one Romney offered last year is not a good one:

We cannot -- we cannot afford to do those things without jeopardizing the future for our kids. It is simply immoral, in my view, for us to continue to rack up larger and larger debts and pass them on to our kids, knowing full well that we'll all be dead and gone before it's paid off. It makes no sense at all.

Romney has committed to capping federal spending at 20 percent of gross domestic product. Aside from whether that level is too low (and I'm inclined to say it is), one problem with a federal spending cap is that you can meet it by shifting spending down to state and local governments.

If certain federal government activities are "unaffordable," they don't become more affordable because state governments pick up the tab. Often, they become even less affordable -- the federal government has several fiscal advantages over states, including access to a broader tax base and an ability to borrow more cheaply.

But a downward shift of fiscal responsibilities is a key component of Romney's policy agenda, most notably in Medicaid, which he would convert into a slow-growing block grant. Over time, states would be forced to pick up an increasing share of the program's costs.

That is a very bad idea: State governments are in a much weaker position to shoulder rising health-care costs than the federal government is. They are also not as well-positioned to pay for disaster relief, an expense which comes in infrequent and quasi-random bursts. But these are the sorts of changes you might make if you were trying to meet an arbitrary cap on federal spending.

(Josh Barro is lead writer for the Ticker. E-mail him and follow him on Twitter.)

Read more breaking commentary from Josh Barro and other Bloomberg View columnists and editors at the Ticker.

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